Dear Editor:
I read Alan Shark’s rebuttal in the Oct. 18 issue of RCR and feel it’s time Mr. Shark take a trip back into the trenches. His advocacy of auctions for private dispatch systems below 520 MHz is misguided at best. One only has to look at what Nextel has done to 800 MHz to guess what auctions will do to frequencies below 800 MHz.
In case he has forgotten, what Nextel is currently using for a “third cellular carrier” operation USED to be private business dispatch two-way radio. While there is still some usage of that band for fleetwide two-way dispatch, most usage and Nextel marketing revolves around telephone interconnection, paging and voice mail … things that private dispatch users usually don’t need or want.
Initially, the original users on that band either bought into the Nextel “our way or the highway” mentality or abandoned their 800 MHz investment in equipment and went to one of the lower bands. So, Mr. Shark was at least right on one point-it IS getting more crowded on the lower bands, and Nextel is one reason why. And Mr. Shark apparently would like to see this happen again, since the consumer market seems to be intent on becoming more wireless in its telephone usage, and that is what the deep-pocket auction participants would likely gravitate toward.
Mr. Shark notes that a simple two-way radio costs the user $500 to purchase (“or more”). Mr. Shark needs to do some homework. While there are $500 (and more) priced radios, our average radio sale to the dispatch customer is more like $400, but he is missing the biggest cost of all-those monthly bills! Today, we charge the business dispatch two-way customer (who paid $400 for each of their radios) about $16 per radio per month to use a community shared repeater, and about $18 per month per unit for trunked service. Soon we hope to have our trunked service networked to offer regional coverage, and will charge a very slight premium for this multi-site capability. It will be primarily fleetwide (“one to many”) service, just what most dispatch two-way users want.
Nextel, on the other hand, is quite proud when they announced to possible investors that their AVERAGE monthly revenue is approaching $80 PER UNIT! Let’s do the math Mr. Shark: You can buy a cellular phone (or a Nextel partial duplex radio) for something under $200 (down to “free” with some contract packages). That’s an initial benefit to the user of between $200 and $400 up front. For the sake of this argument, let’s assume the cellular/Nextel user selects a package of usage that costs them $50 per month (judging from most reports, that’s probably pretty low). That’s $600 per year.
Our trunking customer pays $216 per year, a $384 difference the first year. Just after the first year, that user would have spent the same amount of money buying and using a fleetwide radio from us. After that, the user is at least $384 ahead using a private dispatch system than a cellular/Nextel telephone. And that’s PER RADIO! If the user has a fleet of 10 radios in his or her company, then that company has spent more than $3,800 for simple dispatch two-way radios more than they needed to, if the only options available are commercial providers that auctions promote.
If the trend of cellular-/Nextel-type providers continues as it has, that difference will increase even further. Should someone try to point out that cellular charges per unit have dropped, remember, when cellular first came to Detroit, with only two providers, it had a basic price of $7.50 per unit per month. Try and find that anywhere in the United States now.
We get at least an inquiry a day from a company trying to dispatch their employees with cellular-/Nextel-type systems that are determined to find a less expensive (“I can’t afford these monthly bills”) solution. We’re happy to talk to them. Auctions can have no result other than increasing cost to the user. The competition that exists between numerous private dispatch service providers on these non-auctioned channels keeps usage prices low. So far, all the auctions I’ve seen allow only a very limited number of licenses. This oligarchy necessarily results in higher usage fees, first because the insane prices bidders are willing to pay for such “protected” spectrum and because there are so few players in this bazillion dollar game.
Mr. Shark has also missed “refarming” on the bands below 800 MHz. The new narrow channels have the effect of nearly doubling the available channels, some of which have no users at all on them. License these as a “YG” designator, and you don’t have any sharing, and implement an excellent regional system that works exactly as business wants it to work. And if this “refarming” continues as planned, there will even be another channel splitting scheme in the near future giving even more new channels for the business user. What a great place for the new technologies that Mr. Shark can’t seem to envision.
Mr. Shark’s crystal ball gets even more cloudy when he makes statements like ” … new technologies can’t be implemented on shared spectrum.” Apparently he hasn’t heard of technologies such as “spread spectrum.” Even more advancements would be likely if we did not have the protectionism that auctions promote. It’s my opinion that when a monopoly exists (such as unshared “protected” spectrum), there is far less incentive to design and implement the most cost-effective and efficient solutions to ANY problem, radio communications included.
But then, this is only my opinion.
Scott S. Adams
Vice President
Adams Electronics Co.
